Article

Integrating the sustainability function with compliance, internal audit, accounting and IT

June 13, 2024

While sustainability is now mainstream at many companies, corporate sustainability teams still largely operate separately from core business functions. Because of this, sustainability teams often face challenges persuading other decision-makers to support their efforts. Sustainability initiatives are often encumbered by ill-defined governance and the constant need to defend the business case for sustainability. But as sustainability regulations create concrete risks for companies, sustainability teams require more authority and cooperation to meet these stringent requirements and avoid the fines and reputational damages for not complying. The need for investor-grade sustainability disclosures demands the attention of the accounting, legal, internal audit and technology organizations to be successful. At this critical inflection point for sustainability reporting, it is high time that sustainability teams have a seat at the table and integrate processes with the larger corporate reporting process.

At Baker Tilly, we partner with clients of all sizes, industries and maturity to quickly integrate sustainability with relevant corporate functions ahead of key regulatory milestones. This integration is nuanced, requiring advisors with interdisciplinary backgrounds to support systems integration, map workflows that avoid duplication and communicate effectively across multiple team vernaculars. As companies have limited time to complete these integrations, here are a few considerations to support sustainability teams with this crucial step. 

Integration of sustainability with compliance  

One of the greatest challenges facing companies is a fundamental question – who is responsible for determining the applicability of sustainability-related rules and regulations for the organization? Compliance teams are equipped to flag relevant rules but may lack context to determine if and how the company needs to change sustainability reporting. Sustainability teams can be great partners with compliance to address this landmark shift in reporting.  

1. Champion policy monitoring and scoping. Sustainability regulations are in constant flux, with new developments that extend timelines and shift requirements. Compliance teams have a large scope of responsibility, so tasking the sustainability function to monitor sustainability-related regulatory changes can be hugely helpful. Keeping the organization abreast of rule developments and the timing of workflows is naturally suited to the sustainability team and can help put other teams at ease about the program management of meeting these highly intersectional rules. Regularly reporting to the board and senior leadership teams on regulatory developments to the board and the team’s approach for meeting these rules is a great way to increase the team’s integration and responsibilities.